Reduced work hours are never a fun for human resources professionals to announce. When an organization reduces work hours, it usually means that financial turmoil is striking organization.
This creates stress for not only the human resources team responsible for executing the reduction in hours, but also for the employees. They are having to manage the stress of losing a portion of their pay (and potentially their benefits), along with worrying about the stability of their job in the long term if the company is in trouble.
While stressful, reducing work hours is a great option for organizations who need to limit their expenses but don’t need to layoff employees. They eliminate costs associated with working hours, as well as costs associated with benefits, while still maintaining the workforce.
A lot of human resources executives will also use this as a last ditch effort to turn things around for a company before its gets to the point where layoffs must occur.
Before we dig into the logistics of having a reduction in work hours, make sure to download our sample letter to announce your reduction to employees:
What should you include in a reduced work hours letter?
When creating a letter to notify your employees of their reduced work hours, you will want to use language that is clear and simple. To start the letter, announce that your organization will be having a reduction in force in the form of reduced work hours. Then take a sentence or two to explain what “reduced work hours” means, as you will have a few employees who have never heard of that before.
Next, you will want to clarify by how much your employees work will be reduced. This could be different for employees in different areas of the organization, so pay special attention to these fields lining up with the correct recipient. Your letter should also explain what percentage of full time employee status that employee was, and what they now will be. Finally, make sure to include this employee’s new work schedule in the letter.
In accordance with the reduction in work hours above, your letter should explain how pay and benefits will be impacted. This includes a change in salary, sick leave, paid vacation time, healthcare, and financial benefits. You will also want to state whether or not these reduced hours will change the employees’ overall tenure at an organization (as this could impact retirement).
To be cautious, we also recommend including a copy of any regulations or laws about how an organization must handle reduced work hours in the letter. This provides visibility to the employees, and helps reduce any liability on your part.
Finally, it is always good to give instructions to employees about how to follow up with human resources about any issues that arise with their reduced work hours. Providing an opportunity to voice concerns and appeals is also required of some organizations by state law. Check with your corporate counsel to see what the requirements are in your area.
Pros and Cons Of Reducing Work Hours
Reducing overall work hours is a great way for an organization to turn around their financial situation if things start to head south. It is not as drastic as a layoff, so it can be better received by the public. This means it is less damaging for your overall employer brand, which is great news for your long term hiring and retention.
Reducing work hours has a lot of negatives though. First, the logistics of doing this can be overwhelming to managers and human resources. If your organization needs to turn around its revenue generation, you will have to operate your business in a way that will produce enough value that revenue is created. Your managers, and your human resources team, will need to know exactly how much worker input they need to reach this point.
While this sounds simple, it can be hard in a large organization to clarify what the revenue goal is and how much input is needed from each team to succeed at meeting this. This is generally where workforce planning comes in handy. You can learn more about it here:
Also, this can become a logistical nightmare with scheduling if you have to have certain shifts covered. Let’s say your organization has a classic three shift schedule: first shift is 8am-4pm, second shift is 4pm-12am, and third shift is 12am-8am. If you reduce the work hours of your employees working this shift, will you have idle windows at your organization that need to be covered? Will you have to move workers to different days to cover for less staffed days?
These logistical issues aren’t fun for your employees either. They will have to rethink plans for their personal life, such as child care.
Also, reducing work hours can be a huge morale killer for your employees. Not only are they unsure about the stability of their job over the long run due to the company’s financial issues, but they are also frustrated by the sudden change in their schedule and reduction in pay.
For example, think about a potential employee at your organization named Howard. Howard is a single dad that relies solely on the income of his employment with your organization. With the reduction in work hours, he has less income to pay for his rent and other expenses. He also has a different schedule, so he will have to figure out different child care, and miss some of his night classes that he is taking to get his degree.
The stress Howard is facing by the reduction of his work hours at your organization is huge. And that is just one person! There will be multiple people in your organization that feel just as much or even more stress than Howard.
This is why several organizations completely skip over offering reduced work hours and instead have a voluntary layoff. This is because it allows people like Howard, whose life will be extremely impacted by your reduction in hours, to keep his normal schedule, while letting other people go who might actually want to leave.
How To Evaluate Your Reduction in Work Hours
If your human resources team takes the time to implement reduced work hours, you should have a plan in place to evaluate whether it worked for your organization.
To develop an evaluation plan, make sure that your human resources team first understands what the goals are of your reduction in hours event. Do you want to eliminate costs over the holidays? Are you looking to increase profits? Ask your executives for clarification on this, and then develop an evaluation plan based on their goals.
Here are some key metrics that you should be tracking throughout this time period:
- Employee Morale & Engagement
- Employee Productivity
- Revenue Generated Per Employee
- Total Growth Towards Executive Goal
To track employee morale and engagement, send out a company wide anonymous survey before, during, and after the reduction in work hours event. Ask questions about their morale and engagement, and then develop an overall score based on their answers. Compare your average scores from the three different instances that you sent the survey out.
Calculating employee productivity is difficult, because it can be done many ways. If your employees have hard products as their work output, than the production of those could be your measure of productivity. If they are in sales, the number of deals that they generate could also be a measure of productivity. They key here is to find a way to measure it, and then compare productivity levels before, during, and after the reduction in work hours.
Your human resources team also needs to track the difference in revenue generated by employee throughout this process. This can easily be done by taking revenue generated divided by your total number of employees.
What Comes Next?
If your reduced work hours solved the challenges your organization was trying to face, your Human Resources team will want to spend time on creating strategies that keep these challenges at bay moving forward.
If your reduction didn’t work, your HR team will need to come up with another plan to help your organization improve its bottom line. This could be a furlough, offering unpaid sabbaticals, a voluntary layoff or voluntary retirement event, or even a layoff.
To choose between these next steps, once again ask your executives what their long term goals are, and then use that information to pick which type of event makes most sense. For example, if your executives just want to keep costs low over the summer, but don’t see a need to eliminate all of their workers, it might make sense to implement a furlough.